The Betting Odds Are Against Blagojevich

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Former Illinois Gov. Rod Blagojevich smiles at a supporter as he departs the federal courthouse after his defense team rested without calling any witnesses in his federal corruption trial Wednesday, July 21, 2010 in Chicago.

Updated at 11:00 AM CDT on Monday, Jul 26, 2010

What are the odds that Rod Blagojevich will be convicted this week? If you’re a betting man, they’re 3-1 in favor. On InTrade, the popular Internet prediction marketplace, shares on a guilty verdict in the Blagojevich trial are selling at 75.

That’s bad news for Blagojevich, because InTrade is the most accurate political barometer in America. The bettors on InTrade correctly predicted both of Blagojevich’s elections for governor. In 2008, they called the results of all 50 states, a feat unmatched by any poll, or even by the poll of polls at fivethirtyeight.com.

Man-on-the-street interviews have revealed that Chicagoans have doubts about Blagojevich’s guilt. But, as usual, the hoi polloi are less informed than the gamblers. Betting markets are more accurate than polls because the numbers are set by people who have an informed opinion, and are willing to put money on it, not people who’ve been randomly solicited by a pollster, or a reporter.

[E]lectoral forecasters should pay as much attention to the betting odds as to the opinion polls. When money is on the line, informed people, perhaps including insiders, have an incentive to turn their knowledge into cash by making big bets. In the process they make the odds more accurate. And of course, there are several reasons to lie to pollsters, but no reasons to make a money-losing bet.

The only good news for Blagojevich: odds on his conviction have fallen steadily since his trial began. In early June, they were trading at 90. They experienced their biggest drop on July 12, the day the U.S. Attorney’s office rested its case. Perhaps bettors were hoping for something more from the prosecution?

If you want to know who gave the most effective closing argument, log on to InTrade tonight, and see if the odds on a conviction have risen or fallen. The betting gets heavier as decision day approaches, and investors have all the available info.